10 Important Steps To Take When Selling A House To A Family Member (& What To Avoid)

Selling a home to a family member might seem like the perfect way to avoid headaches and expenses, but as one letter writer to MarketWatch's Moneyist learned, that's not always the case. The writer and siblings agreed to sell their parents' Hawaiian home to their sister without an appraisal for $3 million. After a trust-mandated appraisal, the siblings found out that the house was actually worth $3.2 million. The mother was now living in assisted living, and the sister had spent $100K on renovations so the property could be rented out to help cover assisted living costs. Now the sister said she would only pay $2.9 million for the home. The letter writer found this unfair because the sister would be getting $200,000 in equity right away. But Quentin Fottrell, MarketWatch's advice columnist, had some tough-love advice for the writer. If an agreement couldn't be reached, then the house should be sold on the market, he said.

This Moneyist problem highlights the potential pitfalls of selling a home to a family member. Yet, there are some benefits. Selling property to a relative can keep a beloved home in the family. It can also be a great way to help a family member in need or for parents to assist their children in buying a home. If you're considering selling a home to a family member, here are important actions to take and mistakes to avoid. 

Selling a home to a relative starts and ends with family. Therefore, the first major step should be to gather those involved with the sale and have a long conversation where everyone gets to lay out their thoughts, concerns, and expectations about what's to come. This is the time to speak candidly about the home's potential value, who will handle certain responsibilities, and what the timeline of the process will look like. By having everyone at the table, you can outline the path forward and have all parties on the same page before you start the sale.

This is an important meeting, and it shouldn't be rushed. Choose a time that is free of distractions when no one has to rush off to work or attend a school event. If it helps, order a pizza so everyone's fed during this discussion. You and your family members may talk for hours, and that's okay. The more you communicate, the better chance you'll have of making this work. Avoid inviting any relatives not directly involved in the sale. Outside opinions shouldn't matter and might invite unnecessary conflict. This process can create tensions and hurt feelings, so it's best to be as open and honest as possible.

It can be tempting for sellers to assume that they already know how the process will work. But you don't want to go into this blind. Doing your own research on your local market, tax rules, and other concerns will help you get informed and prepared. This will also be a good time to think about what really matters to you in this sale. Is it the joy of helping your child buy a home? Or preserving a property steeped in familial history? Or maybe it's the safety of selling your home for a specific amount instead of taking a chance on the market. Whatever the reason, decide on it and let that be your guiding light as you research and move through this time.

Spend time going through local real estate and attorney websites and blogs. This will help you understand how the process works and find a professional to hire (more on that later). Second, seek out information from government sites like IRS.gov to prepare yourself for potential tax issues. You don't want to be blindsided with an enormous tax bill when all is said and done. Research is not a substitute for hiring an expert, but it can help you know the right questions to ask and plan financially.

If home sales is happening within the family you might be thinking, do I really need a real estate attorney? The answer is yes. A real estate agent will help navigate the paperwork needed to sell the home, and he or she can be a much-needed neutral third-party during price negotiations. 

Some states require a real estate attorney to complete transactions, but even if yours doesn't, a lawyer can assure your sale complies with any laws targeting fraud or money laundering. And finally, the IRS does have rules and regulations regarding non-arm's length transactions, meaning a deal between two related people or two people with a pre-existing relationship. Having a tax advisor or certified public accountant to help you understand how the sale will impact your taxes will keep you informed and help you avoid surprises when the tax bill comes.

To build your team, start by asking around for recommendations. Friends who have recently sold homes will be great resources and may know what to look for in a real estate agent. You can also read reviews online to find professionals who specialize in family sales. It can be tempting, but avoid hiring a family member who is a realtor, attorney, or tax consultant, as that could cause conflicts of interest.

The fair market value of your home is essentially the price a stranger would pay if you listed it publicly. Determining this number is important because it sets a price expectation for everyone. You, the seller, know what you could be getting and how you should price your home to comply with the IRS's gift tax requirements. Your buyer will also have a concrete number to work with as they secure a loan, think about their expenses, and plan for their future. Now that a number is known, consider having another conversation to update any timelines or even delay the sale until more money can be saved.

As the seller, you have options for determining the home value, which could be high, especially if it's in one of the housing markets heating up in 2026. You can hire an appraiser to perform an official assessment. If you have a realtor, he or she can do a competitive market analysis using current data on recent sales to determine the fair market value. Either option will give you a solid number from which to start price negotiations. Keep in mind that the appraisal might be mandatory if you plan to sell below market value.

A home inspection is usually up to the buyer's discretion, but having one may protect you from legal issues down the line. A detailed inspection report lays everything out on the table. It lists the state of the home as well as any concerns or repairs that should be made. The inspector will also point out any building code violations or legal concerns about the property. Knowing this information can protect you from a lawsuit, and it might impact the house price.

Your family member or realtor can set up the inspection. When they arrive, give them access to every space in the house to help ace the home inspection. This can feel very personal. You've likely worked very hard to keep your home in excellent condition. But all homes age, and it can be hard to keep up with repairs you can't see as easily, such as pipe and HVAC needs.

Now that you have your fair market value and inspection, it's time to sit down and hash out a final price. You do have options here. You might consider selling under that price, like the Moneyist letterwriter. There are potential tax complications from this choice, and you should make peace with taking a cut on the sale profits. But if your home needs some serious renovations, then this can also factor into the final price. In that instance, it may be better to sell under market value if it means you don't have to go through the hassle of replacing a furnace or backyard fencing.

This is your realtor's time to shine. He or she can help you and your family member settle on a fair price for the home. When needed, they can also offer neutral advice on those home repair questions, and they can provide solutions that benefit all parties. This negotiation can be done over email, but it might be better to get everyone together to talk this out. Text communications can be misinterpreted and come off as unfeeling in a very emotional process. Having everyone together for this limits the potential for miscommunications.

Speaking directly with family members while negotiating a price for a home should be prioritized, but that doesn't mean writing should be neglected. Sellers and buyers without a written record of an agreed price open themselves up not only to disputes over the amount but also the potential for lawsuits and family rifts that may never heal. You may love and trust your relatives. You may feel confident in their values and honor. But a handshake deal over real estate rarely ends well.

Whenever a number, repair, or upgrade is discussed, immediately write it down on a document with a written or electronic date. Your realtor will likely do a lot of this for you as they send documents and emails back and forth between parties (remember, it's in their best interest as well to establish a number). But you shouldn't leave it all up to your realtor. Even if you casually discuss a number over lunch or at a family event, text your relative immediately after with a record of what was discussed and any numbers mentioned. This is a time-stamped record, and your relative's response can also serve as evidence if a lawsuit is ever filed.

Once the sale goes through, your family member will be responsible for maintaining and making repairs to the property. To help them along, it's important to collect all vital documents and have them ready to go in a folder. This can include appliance manuals, receipts for major installations such as windows, and any previous sale and inspection documents. Your relative may need these documents for taxes, repairs, or future sales, so it's better to provide as much information as possible.

This process, one of the simplest ways to get your home ready to sell, can be daunting, especially for sellers who haven't been great record-keepers. Think through all the major repairs, purchases, and renovations you've had since buying your home. Then set aside an afternoon to go through your filing cabinets, junk drawers, and anywhere else these documents may be hiding. Feel free to include any business cards from general contractors, electricians, or salespeople who worked for you over the years. Keep all of these important papers in a box, safe, or filing cabinet for the new owners.

Title insurance is another home purchasing cost that the buyer usually pays. It provides the buyer and often the lender with protection against title defects. For example, if there is a lien on your property, title insurance would give cover to the buyer. But for family property, especially one that has had multiple owners, title insurance also covers the buyer in the case of any owner disputes. You may not know of any disputes, but homes that have been handed down over generations may be the subject of fights and arguments that happened before you were born. There could be heirs with a claim to the property, boundary disputes that have been forgotten now but may be remembered with a future neighbor, or mistakes in previous documents made by lawyers and other record-keeping officials.

This insurance will be up to the buyers to decide. You can still encourage them to purchase title insurance if you feel comfortable doing so. Your realtor can also provide insights as to whether title insurance is needed or recommendations for procuring it. Whatever your buyer decides, make sure you know one way or the other.

Now it's crunch time. Even without family matters, selling a home can be an emotional process. It can be hard to let go of a property that's been loved for many years. It's where you've spent holidays, shared family meals, and experienced many everyday joys and comforts. With everything going on and happening a little fast, you may experience your emotions a little more deeply. Well-meaning questions or comments from family members can feel surprisingly sharp and painful, and that's completely normal. But you don't want to lash out at your relatives or make demands out of fear or stress. This could derail the sale altogether.

When feelings run high, it's important to lean on your own coping strategies. For some people, stopping and taking a few deep breaths to center themselves can work for short-term relief. Taking a walk, practicing yoga, or doing cardio exercises can also help keep your stress under control and serve as an outlet for your feelings. Scheduling a few sessions with a mental health professional can also help you process more complicated emotions and talk through histories, patterns, and scenarios to lessen the impact of this charged time.

This is it, the moment that everyone's been working toward. The closing date signifies the end of the selling process. All of the parties will go over and sign all the necessary documents. Every loose end should be tied up here, and everyone should have a clear understanding of the price, any outstanding repairs, and what else should be done before closing on the house. At the end of the meeting, the house will officially be sold to your family member.

The closing should take place at a neutral location such as the attorney's office or title office. Both parties will need to be present with valid IDs. The seller should bring keys, garage door openers, and any other important items needed for the sale. The buyer will have their down payment ready, as well as any closing costs that must be paid. Your attorney will have the deed — which is the official document that transfers the ownership of the property to your buyer — ready to go and will walk you through all of the paperwork that must be signed. Once everything is set, the sale will be completed, and your attorney and realtor will file the paperwork necessary. That's it. The sale is complete.

You're almost done. Now that the sale is complete, it's time to finish up the last few chores before you move out. You will need to turn off or transfer all utilities. You will also need to cancel or update your homeowner's insurance, depending on whether you have a new home ready to go. You don't want to pay for services you're not using once you move out, so don't forget this important step.

This is a process that takes more time than anything. Make a checklist of what needs to be addressed and who needs to handle each task. It may be that your spouse or partner set up the account with your internet provider, so they should cancel or move the service. Once you have a list and jobs assigned, set aside some time to work your way through your portion. 

Tax season may be months away from the time you sell your home, but there may be forms you need to file with the state and federal governments. Much of this will depend on where you live and the details of the sale. A sale with a traditional mortgage might have different tax implications than one where you are still a partial owner. Your lawyer may have also filed some documents on your behalf. The goal here is to know where your tax documents have been sent, and anything else you need to do.

You don't want to risk a penalty fee or other legal complications for skipping this step. If you hired a tax consultant or certified public accountant, then this step should be easy. You should already have all of the paperwork and detailed instructions on how to file everything with the right state and federal agencies. You might even have this work done for you. If other documents must be filed the next year, write down exactly what needs to be done and which forms need to be filled out.

The sale is over. You've moved out and moved on. But have you? When family property is involved, it can be tough to fully let go, especially when the buyer is your child or parent. You may keep a key if you moved nearby and think nothing of letting yourself in the back door to grab something when no one's home. You might even feel obligated to tell the owners how to conduct maintenance. But this will only cause privacy tensions with the new owners and probably result in fewer invitations to visit.

Parting with a well-loved home can be difficult, but doable if you're committed. If you still have a key, leave it at home, not in your car, so you can't impulsively let yourself inside. You may not like the flowers your child planted out front, but write down your frustrations in a notebook instead of telling them. This will help you release some agitation without damaging your relationship with them. A counselor can also provide an outlet for emotions and give you tips on how to manage this transition healthily.